“We believe that public blockchains with censorship resistance have the potential to disrupt society, when private blockchains are merely a cost-efficiency tool for banking back offices. One can measure its potential in trillions of dollars, the other in billions. But as they are totally orthogonal, both can coexist in the same time, and therefore there is no need to oppose them as we can often see it.” 

The good thing about sidechains is that they are independent of their main chain. Sidechains take care of their own security. Problems occurring on the sidechain can, therefore, be controlled without affecting the main chain. Likewise, a security problem on the main chain does not affect the sidechain although the value of the peg is greatly reduced.

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My take is that the Bitcoin architecture is a solution to the problem of how to maintain consensus about a ledger when the participants are unknown and many of them are adversarial (I know this is loose language… computer scientists working in the consensus space are more precise but I think this captures the essence…. i.e. we’re explicitly in a world where there is no “leader” and no identities for those providing the consensus services).
The words block and chain were used separately in Satoshi Nakamoto's original paper, but were eventually popularized as a single word, blockchain, by 2016. The term blockchain 2.0 refers to new applications of the distributed blockchain database, first emerging in 2014.[13] The Economist described one implementation of this second-generation programmable blockchain as coming with "a programming language that allows users to write more sophisticated smart contracts, thus creating invoices that pay themselves when a shipment arrives or share certificates which automatically send their owners dividends if profits reach a certain level."[1]
A blockchain is so-called “public” (or open) when anyone can become a member of the network without conditions of admission. In other words, anyone wishing to use the service proposed by the network can download the protocol locally without having to reveal his or her identity or meet predetermined criteria. A protocol is a computer program that could be compared to a Charter in that it defines the rules of operation of a network based on a blockchain. For example, the members of the bitcoin network download the Bitcoin protocol (through the intermediary of their “wallet”) to be able to join the network and exchange bitcoins, but the only condition is to have an Internet connection.

Plasma is a proposed framework for incentivized and enforced execution of smart contracts which is scalable to a significant amount of state updates per second (potentially billions) enabling the blockchain to be able to represent a significant amount of decentralized financial applications worldwide. These smart contracts are incentivized to continue operation autonomously via network transaction fees, which is ultimately reliant upon the underlying blockchain (e.g. Ethereum) to enforce transactional state transitions.
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Transactions are cheaper, since they only need to be verified by a few nodes that can be trusted to have very high processing power, and do not need to be verified by ten thousand laptops. This is a hugely important concern right now, as public blockchains tend to have transaction fees exceeding $0.01 per tx, but it is important to note that it may change in the long term with scalable blockchain technology that promises to bring public-blockchain costs down to within one or two orders of magnitude of an optimally efficient private blockchain system
Ardor is a blockchain platform predicated on childchains (sidechains) that use proof of stake (PoS) consensus. It uses the primary chain as a security chain and the childchains for processing transactions to increase scalability. Their design is specifically focused on speed and efficiency through PoS consensus and removing blockchain bloat through pruning.
Function Transactions executed between the locks and unlocks of the main chain tokens don't bloat the main chain. As the technology of a side chain is connected to its main chain, it can be used to build on the developments of the main chain and introduce new features to the market. Child chains serve as the transactional chains of the parent-child architecture, as the parent chain retains minimal features.

Confidential Transactions — At present, all Bitcoin transactions are completely public, albeit pseudonymous. Confidential Transactions, as the name implies, conceal the amount being transferred to all except the sender, the recipient, and others they designate. The resulting transaction size is significantly larger, but includes a sizable “memo” field that can be used to store transaction or other metadata, and is still smaller than eg Zerocoin.(Note that this isn’t as confidential as Zerocash, which conceals both the amount and the participants involved in any transaction, through the mighty near-magic of zk-Snarks. Mind you, Zerocash would require an esoteric invocation ritual to initiate its network. No, really. But that’s a subject for a separate post.)

Step back from the details for moment and consider what’s been described.  We now have a way to move coins from Bitcoin onto another platform (a sidechain) and move them back again.   That’s pretty much what we do when we move them to a wallet platform or an exchange.  The difference is that the “platform” they’ve been moved to is also a blockchain… so it has the possibility of decentralised security, visibility and to gain from other innovation in this space.


Mastercoin and Counterparty are embedded consensus protocols (or meta-protocols) that use the blockchain to store their transactional data. Bitcoin devs, except Peter Todd who was hired by both teams to help them find a proper solution, are very unhappy, to say mildly, about storing the data on the blockchain. Heated discussions on this topic go on for hundreds of pages on bitcointalk and Mastercoin github issue. Mining pools like Eligius started censoring Mastercoin transactions (not sure if they are continuing with this practice right now, but the operators of this pool are adamant that data do not belong to the blockchain).
At Iryo, we consider databases and blockchains that are not opened to the public to be insecure they, can easily be altered by the business running it, at their discretion and it goes against the ethos of the open and transparent cryptocurrency space. Designed to keep public out and introducing “trusted” middlemen, private chains forget that trusted third parties are security holes.

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In a cooperative consensus algorithm, there is a fixed number of voters. Voters cannot leave and join randomly. All voters know each other and every voter has only one vote. If the majority agree on the value of the data, then the system is working as designed. This can handle over 30,000 transactions per second. Scaling the number of voters can be an issue, because every vote proposed by a voter must be delivered to every other voter in the consortium.
So, there is a kind of centralized authority that decides who has a right to contribute to and to audit the network. What is more – it’s possible to restrict viewing information stored on private blockchains. It might seem that in such conditions, a blockchain is no longer the blockchain as it lacks transparency and decentralization. Well, these remarks are fair, but only when the network is estimated from the outside. Within it, the rules remain the same as for public networks: it is still transparent for all the members.
Byzantine fault tolerance (BFT) is what keeps the blockchain fundamentally secure. For simplicity, let’s say there were 100 nodes in a blockchain network (there are currently about 10,500 full Bitcoin nodes in the world). What happens when one node wants to tamper with the latest block and say other Bitcoin users sent him a whole bunch of Bitcoin when they really didn’t?
When blockchain technology was introduced to the public in 2008 (via Satoshi Nakamoto’s famous white paper), it would have been hard to predict that private or consortium blockchains would become popular. But recently, there’s been a lot of buzz about this in the digital currency community. Many companies are beginning to experiment with blockchain by implementing private and consortium chains, although some people are critical of this. This discussion not only centers on use cases and benefits, but whether non-public blockchains are an appropriate application of the protocol to begin with.
The good thing about sidechains is that they are independent of their main chain. Sidechains take care of their own security. Problems occurring on the sidechain can, therefore, be controlled without affecting the main chain. Likewise, a security problem on the main chain does not affect the sidechain although the value of the peg is greatly reduced.
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Sidechains are blockchains that allow for digital assets from one blockchain to be used securely in a separate blockchain and subsequently returned to the original chain. The term “sidechain” in this case is used for context, in that the paper initially refers to Bitcoin as the “parent chain” and connected blockchains (altcoins) as “sidechains,” but the term is interchangeable so that altcoins interacting with each other can each be a parent chain interacting with sidechains. You may have also heard of “childchains,” which are also sidechains.
Jump up ^ Iansiti, Marco; Lakhani, Karim R. (January 2017). "The Truth About Blockchain". Harvard Business Review. Harvard University. Archived from the original on 18 January 2017. Retrieved 17 January 2017. The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
Blockstream is collaborating with industry leaders to create a Bitcoin micropayment system that supports high volumes of instant tiny payments using proportional transaction fees and that operates at the speed of light. We are now developing Bitcoin Lightning prototypes and creating consensus on interoperability. Our c-lightning implementation is the go-to code and specification for enterprise Lightning Network deployments on Bitcoin, and is what powers our easy-to-use Lightning Charge HTTP Rest API.
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The two-way peg is the mechanism for transferring assets between sidechains and is set at a fixed or predefined rate. Bitcoin’s Dynamic Membership Multi-Party Signature (DMMS) plays a vital role in the functionality of the two-way peg. The DMMS is one of Bitcoin’s lesser known but incredibly important components. It is a group digital signature — composed of the block headers in Bitcoin — that has no fixed size due to the computationally powered PoW nature of its blockchain. The Pegged Sidechain paper further describes it as:
By definition, blockchain is a ledger of all transactions that have been executed and could be seen as a write-only platform, wherein transactions once executed cannot be modified later. This platform has been further divided into Public and Private blockchain. Is there a third one? a hybrid mode such as a ‘Consortium blockchain’ as represented by Vitalik Buterin, founder of Ethereum, a decentralized web 3.0 publishing platform.
This type of blockchains can be considered a middle-ground for companies that are interested in the blockchain technology in general but are not comfortable with a level of control offered by public networks. Typically, they seek to incorporate blockchain into their accounting and record-keeping procedures without sacrificing autonomy and running the risk of exposing sensitive data to the public internet.

What if we could run heavy computations in a more centralized fashion, say on a single server, and then periodically integrate the results onto the main blockchain for posterity. We temporarily expose some vulnerability while the parallel server runs the heavy computation, but we get a massive benefit in that we don’t have to run the computation on chain, and simply need to store the results for future verification. This is the general premise behind Truebit. We won’t get into all the details of Truebit but there is a concept of challengers, who check to see the computations that were made have high fidelity.


This type of blockchains can be considered a middle-ground for companies that are interested in the blockchain technology in general but are not comfortable with a level of control offered by public networks. Typically, they seek to incorporate blockchain into their accounting and record-keeping procedures without sacrificing autonomy and running the risk of exposing sensitive data to the public internet.
A side-chain is a separate block-chain that runs parallel to the main chain, for example the Bitcoin network, and is attached to the main chain through a simple two-way peg, or special 'address'. A user sends coins to this special address and this amount is effectively 'locked' out from use on the main chain and available on the side chain. This currency is released back to the main chain once its been proven that the side chain is no longer using it.

If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur. For example, Ethereum has hard-forked to "make whole" the investors in The DAO, which had been hacked by exploiting a vulnerability in its code.[31] In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment.[32]

A blockchain is a continuously growing list of records called blocks, these blocks are linked and secured using cryptographic algorithms. Each block typically contains a hash (a link to a previous block), a timestamp as well as transaction data. Full nodes validate all the transactions, but are unable to settle the disagreements in regards to the order in which they were received. To prevent double-spending, the entire network needs to reach global consensus on the transaction order. It achieves this by using centralised parties or a decentralised proof of work or proof of stake algorithm (and its derivatives).
Hasta la fecha (Agosto del 2016), las sidechains sobre Bitcoin no son más que algo teórico. Una implementación de este tipo requeriría de un cambio en el código Bitcoin (hay miembros de la comunidad Bitcoin con gran prestigio, como es el caso de Peter Todd, que argumentan que una sidechain, tal y como la describe Blockstream en su paper, no podrían llevarse a la práctica en Bitcoin sin hacer un gran cambio, hard fork, en Bitcoin). En el mismo paper de blockstream se reconoce que una implementación de este tipo, la cual su teoría es simple pero su implementación compleja, se enfrenta a problemas que no está del todo claro que puedan solventarse (y no todos son de tipo técnico).

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A federation is a group of servers that act as an in-between point between the main chain and a sidechain. The Federation decides when the user’s coins are locked as well as when they are released. The developers of the sidechains can choose the members of the federation. The downside to using federations is that they add another layer between the sidechains and the parent chain.

And now for the second clever part. The logic above is symmetric. So, at any point, whoever is holding these coins on the sidechain can send them back to the Bitcoin network by creating a special transaction on the sidechain that immobilises the bitcoins on the sidechain. They’ll disappear from the sidechain and become available again on the Bitcoin network, under the control of whoever last owned them on the sidechain.


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New organizational structures will emerge that will make inside/outside much less clear. These clear boundaries started to erode with the extranets in the 90s, then with the multi-tenant cloud platforms, and lately with the smartphones and the IoT. As we move forward we will see value chains where participants have multiple roles and affiliations. We will be designing token based systems that produce gains for any participants, internal or external.

Public chains to the rescue! Public chains offer public transaction data that can be verified in real-time by anybody that cares to run a node. The more independent users or institutions that take part in verification, the more secure and decentralised the chain becomes! At Iryo, we strive to have every clinic doing full validation of the global state for the relevant smart contracts (EOS based). Public blockchains are mainly useful for two things; value routing (including initial creation and distribution) and trustless timestamping of messages.


Many blockchain enthusiasts believe in the value of networks that are not only decentralized — which most closely resembles the current model of the Internet — but distributed. This includes Tim Berners-Lee, who founded the World Wide Web in 1989. Berners-Lee has proposed that blockchains can be used to reinvent the web in a more distributed and peer-to-peer fashion.
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